Go big or go… close.

Small schools are too dependent on enrollment, one expert argues

Forty percent of U.S. colleges enroll 1,000 or fewer students—putting them in a precarious financial position and at risk of closure, Jeffrey Selingo argues in the Washington Post

Another 40% have fewer than 5,000 students, Selingo says.

Recently, Burlington College and St. Catharine College both announced they are closing. And Chestnut Hill College announced it's slashing salaries to avoid layoffs.

The smallest colleges and universities are the ones that are seeing the steepest enrollment declines. Since 2010, enrollments at schools with fewer than 1,000 students have dropped 5% on average—compared with a slight increase of average enrollments at institutions with more than 10,000 students.

"The problem now is that there are too many colleges chasing too few students," Selingo writes. 

Related: Are today's students migrating to value?

In the Northeast and Midwest, high school graduating classes continue to shrink. The class of 2028 is expected to be 10% smaller than the class of 2009. And because most students go to college within 250 miles of their hometown, colleges in those regions will continue to face challenges recruiting.

A 2015 Moody's Investors Services report forecast that the average number of college closures per year, which currently sits at five, will triple by 2017. And a Parthenon-EY analysis found about 800 colleges are dealing with "critical challenges" stemming from their small size or inefficiencies, Selingo says. 

"At these colleges, there is zero margin for error. A first-year class that comes in even one or two students short of estimates wreaks havoc on the budget," he writes.

About 20% of colleges run annual budget deficits. And at schools with fewer than 5,000 students, nearly 60% of revenue come from tuition. As tuition prices and discounts increase, the revenue model gets less and less stable.

"In this era, unless a college is sitting on billions of dollars in its endowment, its size matters to its ultimate financial success," Selingo writes. "This is a departure from the past, when the philosophy was always that an increase in size comes at the expense of academic quality and prestige" (Selingo, "Grade Point," Washington Post, 6/10).


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